Consider a world that only consists of the three stocks shown in the following table: (1)Calculate the total value of all shares outstanding currently.  (2)What fraction of the total value outstanding does each stock make up?  (3)You hold the market portfolio, that is, you have picked portfolio weights equal to the answer to part b (that is, each stock’s weight is equal to its contribution to the fraction of the total value of all stocks). What is the expected return of your portfolio?

Data: So 101; X= 114; 1+r= 1.12. The two possibilities for sr are 143 and 85.

Suppose you invest $100, $410, and $640 of your wealth into a stock, the market, and a risk - free asset, respectively. The beta of the stock is 1.3. What is the beta of the portfolio? Enter your answer rounded to 3 DECIMAL PLACES. Enter your response below.

Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two-for-one in the last period. A B C Po 82 42 84 Rate of return 00 100 Divisor 200 200 P1 87 37 94 01 100 200 200 % P2 87 Required: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t= 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) 370 47 92 100 200 400 b. What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Calculate the rate of return of the price-weighted index for the second period (t=1 to t=2).

Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two-for-one in the last period. ABC Po 86 46 92 le 100 200 200 Rate of return P1 91 41 102 Q1 100 1.89 % 200 200 P2 91 41 51 Required: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) 22 100 200 400

Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two for one in the last period. Stock A B C Po 90 45 80 90 425 450 650 a. Rate of return b. New divisor c. Rate of return P1 95 40 90 91 425 450 650 % P2 Required: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t= 1). Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. Calculate the new divisor for the price-weighted index in year 2. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. Calculate the rate of return for the second period (t=1 to t = 2). Note: Round your answer to 2 decimal places. % 92 425 450 95 40 45 1,300

Q1: Explain the meaning and significance of a stock's beta coefficient. Illustrate your explanation by drawing, on one graph, the characteristic lines for stocks with low, average, and high risk. (Hint: Let your three characteristic lines intersect at r_i=r_m=6%, the assumed risk-free rate.) Q2: Define the following terms, using graphs or equations to illustrate your answers where feasible. a) Risk, stand-alone risk b) Expected rate of return c) standard deviation, variance d) risk premium for stock i, market risk premium e) Capital Asset Pricing Model (CAPM) f) Expected return on a portfolio g) market risk, diversifiable risk h) Beta i) Security Market Line; SML equation j) Slope of SML and its relationship to risk aversion. Q3. Differentiate between (a) stand-alone risk and (b) risk in a portfolio context. How are they measured, and are both concepts relevant for investors? Q4. Can an investor eliminate market risk from a portfolio of common stocks? How many stocks must a portfolio…

2. The following table shows the constituent stocks of a hypothetical index. Stock B splits two-for-one during the period. Stock A B C Beginning of Period Price ($) Shares 30 75 36 2,000 500 1,200 End of Period Price ($) 26 40 32 Shares 2,000 1,000 1,200 a. Calculate the returns on both the price-weighted index and the market value- weighted index of three stocks over the period. b. If you just buy 5,000 shares of stock C for $36, hold for 1 year, collect $8 dividend and sell it at $32. Calculate your total return.

Consider the three stocks in the following table. Pt   represents price at time t, Qt represents shares outstanding at time t. Stock C splits two for one in the second period from t=1 to t=2. Calculate the rate of return on a price-weighted index consisting of the three stocks for the first period from t=0 to t=1. Answer in percentage. Answer options:  0.00% 2.49% 6.06% 8.95% 1.30%

Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two-for-one in the last period. A B C Po 82 42 84 00 100 200 200 Divisor P1 87 37 94 01 100 200 200 P2 87 37 47 92 100 200 400 Required: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t=0 to t= 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) Rate of return I % b. What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2 decimal places.) D c. Calculate the rate of return of the price-weighted index for the second period (t=1 to t = 2).